2015 (1) TMI 218 - AT - Central Excise

Classification of galvanized silo storage system - Classification under Chapter Subheading 8437 10 00 or under Chapter subheading 9406 00 99 - Held that - It would be appropriate to remand the matter at this stage itself even though in respect of the very same product this Tribunal 2013 (1) TMI 124 - CESTAT BANGALORE had taken a view that the appellant has to deposit the amount that may be payable during the normal period - appellant should get another opportunity to defend the matter before the original adjudicating authority and the additional submissions which have been made before us and which has not been considered by the Commissioner and other relevant matters can be placed before the Commissioner. To ensure that appellant cooperate when the matter is taken up for fresh consideration and no delay is caused, we consider that the remand of the matter should not be made without any condition. - matter remanded back subject to pre-deposit of part of demand - Decided in favour of assesse.

Summary

Issues Involved:
1. Classification of galvanized silo storage system.
2. Justification of duty demand and penalty.
3. Applicability of specific and residuary chapter headings.
4. Consideration of additional grounds and evidence.

Issue-wise Detailed Analysis:

1. Classification of Galvanized Silo Storage System:
The primary issue is the classification of the galvanized silo storage system. The appellant contends that the product should be classified under Chapter Subheading 8437 10 00 of the Central Excise Tariff Act, 1985, which pertains to "Machines for cleaning, sorting or grading seed, grain or dried leguminous vegetables." Conversely, the department argues that the product falls under Chapter Subheading 9406 00 99, which covers "prefabricated buildings." The Commissioner's findings support the department's view, emphasizing that the silos are customized, prefabricated structures installed at the customer site, thus fitting the description of prefabricated buildings.

2. Justification of Duty Demand and Penalty:
The period in question is April 2012 to February 2013, with a duty demand exceeding Rs. 2.67 crores and a penalty of Rs. 50 lakhs. The appellant argues that their classification under Chapter Heading 8437 is correct, as the silos are equipped with various machinery components making them more than mere storage structures. They assert that the classification is based on a bona fide belief and consistent with prior declarations. The Commissioner, however, maintains that the basic character and function of the silos as prefabricated buildings justify the duty demand and penalty.

3. Applicability of Specific and Residuary Chapter Headings:
The appellant contends that Chapter Heading 8437 is specific and should be preferred over the residuary heading 9406 00 99. They cite the Supreme Court decision in Bharat Forge and Press Industries (P) Ltd. v. Collector of Central Excise, which supports the preference for specific headings over residuary ones. The department's position, supported by the Commissioner, is that the silos do not fit the specific description under Chapter Heading 8437 and are better classified under the residuary heading for prefabricated buildings.

4. Consideration of Additional Grounds and Evidence:
The Tribunal noted that only one purchase order was considered by the Commissioner, where silos were supplied without accessories. The appellant argued that in most cases, silos are supplied with accessories and function as complete machinery systems. They also presented brochures and invoices from competitors classifying similar products under CETA 8437 10 00, which were not considered by the Commissioner. The Tribunal found this significant for competitive fairness and decided that these aspects require further examination.

Conclusion and Remand:
The Tribunal concluded that the matter should be remanded to the original adjudicating authority for reconsideration. The appellant is required to deposit Rs. 10,00,000 within eight weeks to ensure cooperation. The Commissioner is to re-adjudicate the matter, considering the additional submissions and evidence provided by the appellant. If the appellant fails to comply with the deposit requirement, the original order will stand.

Operative Portion:
The order was pronounced in open court, emphasizing the need for a well-reasoned order observing principles of natural justice.